Why price isn't always king

Steve Perez of Global Brands explores why price isn't the be all and end all for the British consumer

Steve Perez Global Brands

Increasing inflation and the rise of value-led supermarkets has led to a perception that price is the be all and end all for the British consumer. But there is actually a growing appetite for premium options, particularly in the drinks sector. 

Our research found a growing demand among consumers for quality. We discovered that between forty and fifty per cent of drinkers are willing to pay more for a premium experience.

But with this willingness to loosen the purse strings, comes the demand for drinks manufacturers to justify the higher price point.

We’ve seen the likes of Lidl and Aldi force manufacturers and retailers to be more competitive on price. This has, arguably, led to neglecting a lot of the other factors that contribute to a purchasing decision as customers are swayed towards brands that they feel offer better value.

I would argue that shoppers are not flocking to the discounters because they are cheap, but because they want to get their money’s worth – they don’t necessarily want a low price, they want the right price. 

Rather than doing everything we can to be the cheapest, drinks brands actually need to work harder to make sure that ‘premium’ really means premium.

This goes for everything – taste, packaging and, importantly, ingredients. Another interesting point that our consumer research picked up on was that drinkers will choose a medium sugar option over one that contains artificial sweeteners. 

A recent report from Waitrose found similar results where shoppers would rather buy less than compromise on quality for a range of ‘sacrosanct’ items like chocolate, wine and coffee.

The reality is that consumers have not become ‘cheaper’ but more choosey. What the drinks sector is beginning to realise is people are still willing to pay a bit extra, but they won’t stand for a sub-par result.  

In our soft drinks and mixers range, Franklin & Sons, this has certainly been a key driving force behind product design. We acknowledge that customers aren’t necessarily going to consume our product every day, but will look for a natural, quality taste profile in something they drink as an indulgence.

But if they’re going to pay more, the taste has to justify the increase.

This demand for quality is coupled with an expectation to be given something new. Strangely, I see the resurgence of real ale through the craft scene as the best current example of this groundswell. It shows consumers want a greater variety and are willing to pay a bit more for the experience.

As a result, we now have a thriving community of micro-breweries in the UK to meet this demand for variety. 

This willingness to experiment and a desire to try something different is what sparked the thinking behind our recently launched Crooked range. Reacting to these trends, we saw an opportunity to introduce the world’s first alcoholic soda to the market. This brought together the desire for new and natural flavours and a craft-inspired hoppy malt taste to tempt beer drinkers into a whole new category.

The result was one of the most successful RTDs to launch in 2017.

Drinkers are undeniably more demanding and less brand loyal. But they are also more willing to experiment. This is a huge opportunity for the drinks sector to be more innovative. But, at the same time, we need to ensure that what we offer in the premium space actually fits the bill.

3 December 2017